by The Gould Asset Management Team
Note: This post is an excerpt from Gould Asset Management’s Economic and Market Review for the Second Quarter of 2026. The excerpt is posted here for the benefit of our blog subscribers.
Stocks Rally in Q2 as Technology Leads Rebound
Global stock markets rebounded sharply in Q2. Investors reacted favorably to an interim US-Iran agreement aimed at ending the conflict and reopening the Strait of Hormuz, leading to lower oil prices. Renewed enthusiasm for artificial intelligence and strong corporate earnings helped investors look past lingering concerns over inflation and interest rates.
US large-cap stocks, represented by the S&P 500 Index, surged 15.2% in Q2, lifting year-to-date returns to 10.2%. The rally more than offset a difficult first quarter. Roughly 85% of S&P 500 companies beat earnings expectations.
Technology led all US sectors in Q2, rocketing 43.5% and pushing its year-to-date gain to 32.7%, as chipmakers and other AI infrastructure companies benefited from rising earnings expectations, strong demand for high-end semiconductors, and continued datacenter investment. Industrials also performed well, gaining 14.9% in Q2 and 20.2% year-to-date, supported by demand tied to AI infrastructure, electrical equipment, defense, and energy investment. Utilities were the weakest-performing sector, declining 0.5%, as defensive areas of the market fell somewhat out of favor
Tax-exempt municipal bonds recorded a strong quarter, returning 2.5% as the market rebounded from a sharp March loss. On a tax-equivalent basis, municipal bond yields reached very attractive levels relative to Treasurys early in Q2, supporting strong investor demand.
Looking ahead, the bond market is likely to remain focused on whether the US economy can sustain the strength it showed during the Iran conflict and whether inflation will begin to moderate. Investors will also be closely watching the early months of new Fed Chair Kevin Warsh's tenure. His suggestion that Federal Reserve officials should communicate less frequently could leave markets with fewer signals about the future path of monetary policy, contributing to greater volatility in fixed income markets.
REITs Rally as Q1 Alternatives Leaders Retreat
Alternatives performance was mixed in Q2, with real estate investment trusts (REITs) posting strong gains while gold, energy stocks, and commodities declined. The sharp retreat in oil prices reversed many of the trends that had driven alternatives higher in Q1, as markets responded favorably to an interim US-Iran agreement and the partial resumption of shipping through the Strait of Hormuz. Despite the quarterly pullback, energy and commodities remain solidly positive for the year.
Gold fell 12.6% in Q2, a sharp reversal from the record highs reached earlier in the year, leaving the precious metal down 6.5% year-to-date. Several of the factors that had supported gold began working against it, including softer demand from gold ETF investors, a stronger US dollar late in the quarter, higher US Treasury yields, and a more hawkish Fed outlook.
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